Intel Opens First of Its Web-Hosting Sites
Intel Corp. said it expects to spend more than $1 billion to develop its business of helping companies run Web sites, as the leading computer-chip maker seeks to profit from a boom in Internet services.
The company opened its first Web-hosting site Tuesday near its headquarters in Santa Clara, Calif. The 85,000-square-foot facility can accommodate as many as 10,000 powerful server computers, which clients use to run their Web sites.
Intel, whose chips power more than 80% of new personal computers, is looking for new businesses as PC prices fall. Sales in the Web-hosting industry are expected to rise to $12 billion by 2003 from about $1.5 billion this year, International Data Corp. predicts.
“We are changing our mission from being the building-block supplier to the PC industry to being the building-block supplier to the total Internet economy,” said Mike Aymar, general manager of Intel Online Services.
Another Intel hosting facility in Fairfax County, Va., is nearing completion. The $130-million Internet service center will employ as many as 250 people when it opens early next year.
The company is building centers in London and Tokyo and expects to have 12 centers total, including those in Europe, Asia and Latin America, by the end of 2000.
The Santa Clara facility cost about $150 million, and the total cost for all the facilities is projected to come to more than $1 billion, Intel said.
Intel shares fell 69 cents Tuesday to close at $77.50 on Nasdaq.
Intel is getting into a business populated by more experienced providers such as IBM Corp., Electronic Data Systems Inc. and Exodus Communications Inc.
What makes Intel different from some of its rivals is that it will test and approve the hardware and software that goes into its data centers instead of just providing a secure place to store a wide range of equipment, Aymar said.
The chip maker has invested tens of millions of dollars in a testing facility in Folsom, Calif., designed to certify hardware and software for its Web-hosting sites.
Exodus, also based in Santa Clara, maintains Web site servers in 14 centers in the U.S. and in Europe. It said it expects Intel to go after a different part of the Web-hosting market.
Intel is “going after the middle,” Exodus Chief Executive Ellen Hancock said at a Banc of America Securities conference in San Francisco. “They are not going after the top markets.”
Exodus is building centers and adding consulting to attract more big corporate customers such as Johnson & Johnson, Microsoft Corp. and Yahoo Inc., which already use its services.
Intel also announced a slew of partnerships as part of its foray into the Web-hosting business, including one with UUNet, a unit of long-distance provider MCI WorldCom Inc. for network services, and with financial services firm PricewaterhouseCoopers, Proxicom Inc., Razorfish Inc. and IXL Inc., a subsidiary of IXL Enterprises Inc., for Web site development and services.
*
Reuters was used in compiling this report.
